China’s H1 foreign trade hits new high, signs of slower growth in H2 not cause for concern

Cargo ships carrying containers pile up on the Ningbo Zhoushan Port in Ningbo, East China’s Zhejiang Province on Tuesday. The growth in container throughput for overseas commerce comes because the nation’s yuan-denominated exports jumped 30.1 p.c year-on-year within the first 5 months, customs knowledge confirmed Monday. Picture: cnsphoto

China on Tuesday reported a 27.1 p.c year-on-year commerce progress within the first half of 2021 following 13 consecutive months of progress, shrugging off mounting stress from a set of challenges, together with surging uncooked materials costs, a resurgence of COVID-19 in China’s main export hubs and different exterior hurdles.

At an govt assembly of the State Council on Tuesday, Premier Li Keqiang referred to as for coverage coordination for the remainder of 2021 and subsequent yr to maintain financial progress at “an affordable vary,” vowing secure macroeconomic insurance policies and extra help for small and medium-sized enterprises (SMEs).

Nevertheless, simply as vital because the better-than-expected figures, Chinese language officers and analysts warned of probably slower progress within the second half of the yr resulting from unsure and unstable components, confirming widespread market expectations for slower commerce progress for the world’s second-largest financial system following a world-leading fast restoration from the COVID-19 pandemic. 

Although challenges persist, particularly for sure industries and SMEs, a slower progress within the second half is an indication of the Chinese language financial system returning in a protected method relatively than a sudden lack of momentum, analysts mentioned, noting extra coverage help remains to be underway and a “protected touchdown” is all however assured.

China is anticipated to launch second-quarter GDP knowledge on Thursday, with many seeing a pointy slowdown in progress from a document enlargement of 18.Three p.c within the first quarter to round Eight p.c within the second quarter. Nonetheless, the full-year progress is anticipated to be barely increased than regular.

Greatest figures

Within the first half of the yr, whole commerce surged 27.1 p.c year-on-year to succeed in 18.07 trillion yuan ($2.Eight trillion), with imports growing 25.9 p.c year-on-year and exports rising 28.1 p.c, in keeping with knowledge from the Basic Administration of Customs (GAC) on Tuesday.

In June, when the challenges have been significantly vital, exports expanded by 32.2 p.c, accelerating from a 28 p.c progress in Could, and beating a forecast of 23 p.c, although progress in imports slowed to 36.7 p.c from Could’s document 51 p.c.

“China’s commerce grew for 13 consecutive months and reached a document excessive throughout the identical interval,” Li Kuiwen, an official on the GAC, instructed a press briefing.

In the course of the interval, China additionally recorded high-speed progress with all main buying and selling companions. Commerce with the US rose 34.6 p.c, with ASEAN 27.Eight p.c and the EU 26.7 p.c. Regardless of commerce tensions, China’s exports to the US rose 31.7 p.c, whereas imports from the US jumped 43.9 p.c. US agricultural imports surged 120.Eight p.c.

“Such a result’s laborious to realize, contemplating all of the pressures we confronted – rising prices, the pandemic, and shifting international commerce and financial recoveries,” Bai Ming, deputy director of the worldwide market analysis institute on the Chinese language Academy of Worldwide Commerce and Financial Cooperation, instructed the International Instances on Tuesday.

Previously a number of months, skyrocketing costs of main uncooked supplies, together with iron ore and metals, exerted enormous stress on Chinese language factories, prompting swift motion from officers to stabilize costs. “The rise in worldwide bulk commodity costs sporadically lifted up companies’ manufacturing prices,” Li mentioned.

Within the first half of the yr, China’s iron ore imports elevated 2.6 p.c, whereas corn imports jumped 31.85 p.c. Crude oil imports dropped by Three p.c.

The resurgence of COVID-19 circumstances in late Could in South China’s Guangdong Province, a serious manufacturing and export hub, had a fantastic impression on manufacturing and transport.

The challenges and outcomes highlighted China’s resilience as the largest buying and selling nation, including that many commerce companions nonetheless rely closely on Chinese language commerce after they face critical COVID-19 outbreaks and after they embark on a restoration course of, Bai mentioned. 

China’s commerce with India, which was engulfed in one of many worst outbreaks of the COVID-19, surged 62.7 p.c within the first half in greenback phrases, the quickest progress in China’s commerce with different international locations in the course of the interval, official knowledge confirmed.

China's foreign trade in H1 2021. Graphic: Zhao Jun/GT

China’s overseas commerce in H1 2021. Graphic: Zhao Jun/GT

Warning indicators

Nevertheless, Bai additionally warned that “the true problem” is within the second half of the yr. 

Li additionally warned that commerce would possibly decelerate within the second half of the yr. 

“In the mean time, the COVID-19 epidemic remains to be spreading in lots of locations across the globe, the pattern of the epidemic is advanced and commerce nonetheless faces many unsure and unstable components,” Li mentioned. 

Aside from the COVID-19 pandemic, different uncertainties embody constantly rising commodity costs, the appreciation of the Chinese language yuan, and rising exterior commerce dangers marked by the US’ push for an alliance to include China’s rise, in keeping with Sang Baichuan, director of the Institute of Worldwide Enterprise on the College of Worldwide Enterprise and Economics.

“It is laborious to say how a lot commerce will sluggish within the second half of the yr, however [growth] peaked within the first half of the yr,” Sang instructed the International Instances on Tuesday.

Although many analysts say commerce progress is tough to foretell for the second half of the yr given the uncertainties, total commerce will return to regular for the total yr within the worst case state of affairs. Progress will largely probably keep above 3.four p.c in 2019 earlier than the pandemic, they mentioned.

“So long as there is no such thing as a main downside in epidemic management and prevention within the second half, there might be no huge rollovers in overseas commerce,” mentioned Bai. 

A cargo ship unloads imported potassium chloride at a port in Lianyungang, East China's Jiangsu Province on Wednesday. As the spring ploughing period comes, fertilizer makers increased the volume of imported potassium chloride to ensure production. Photo: IC

A cargo ship unloads imported potassium chloride at a port in Lianyungang, East China’s Jiangsu Province on Wednesday. Because the spring ploughing interval comes, fertilizer makers elevated the amount of imported potassium chloride to make sure manufacturing. Picture: IC

‘Secure touchdown’

Nonetheless, slower progress may have a critical impression on sure sectors and companies, in addition to total GDP progress, analysts famous.

After main the worldwide financial restoration from the COVID-19, China is extensively anticipated to report a a lot slower progress for the second quarter, and even slower progress within the second half of the yr. 

GDP progress may sluggish to round Eight p.c within the second quarter from a document 18.Three p.c within the first quarter, and additional drop to five p.c within the second half of the yr, in keeping with a number of market forecasts.

Nonetheless, analysts argue that even the slowest tempo in GDP progress in 2021 can be increased than pre-pandemic ranges and the slowdown is a “protected touchdown” from unsustainably excessive progress. In its newest forecast launched on June 29, the World Financial institution predicted that China’s financial progress may attain 8.5 p.c for 2021, which might nonetheless be increased than the 6.1 p.c progress in 2019.  

The official warning of slower progress on Tuesday “was to clarify our confidence but additionally a reminder that we won’t take [the risks] flippantly,” Bai mentioned.

Chinese language officers usually are not taking possibilities. Previously few days, they introduced a slew of measures to assist stabilize financial restoration, together with an surprising transfer by the central financial institution to chop the required reserve ratio, or RRR, for industrial banks beginning Thursday to unlock 1 trillion yuan in liquidity, and a State Council coverage doc to spice up overseas commerce. 

Indicating additional help could also be below method, the State Council on Tuesday referred to as for efforts to handle fundraising difficulties for SMEs and labor-intensive companies, and push for main tasks with particular authorities bonds.

With all of the measures underway to carry susceptible sectors and companies, officers are additionally putting a assured observe for the nation’s commerce and financial improvement for the yr. 

“For the total yr, there’s nonetheless hope of comparatively sooner commerce progress,” Li mentioned, including that China’s financial system stays in a secure and upward pattern. 

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